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Grunewald Industries sells on terms of 1/10, net 30. Gross sales last year were $4,342,000 and...

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Finance

Grunewald Industries sells on terms of 1/10, net 30. Gross saleslast year were $4,342,000 and accounts receivable averaged$475,000. Half of Grunewald's customers paid on the 10th day andtook discounts. What are the nominal and effective costs of tradecredit to Grunewald's nondiscount customers? (Hint: Calculate dailysales based on a 365-day year, calculate the average receivablesfor discount customers, and then find the DSO for the nondiscountcustomers.) Do not round intermediate calculations. Round youranswers to two decimal places.

Nominal cost
Effective cost

Answer & Explanation Solved by verified expert
4.0 Ratings (478 Votes)
Solution First you need to know the means of 110 net 30 This means if a customer makes the payment with in 10 days he will get a discount benefit of 1 First we need to    See Answer
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